Regulatory Challenges of Next Generation Networks NGN

1
Regulatory Challenges of Next Generation
Networks (NGN)

• Dieter ElixmannScott Marcus
• Presentation at the 2nd Black Sea and Caspian
  Regulatory Conference
• Istanbul, 22 23 June 2007

2
Overview

• NGN Technological background
• Migration of networks Examples
• Regulatory challenges

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NGN Technological background (1)Evolution of
networks

• The old world

• The new world

MGW Media Gateway MRFP Multimedia Resource
Function Processor BGCF Breakout Gateway Control
Function MGCF Media Gateway Control Function SLF
Subscriber Location Function
MRFC Multimedia Resource Function Controller
S-CSCF Serving Call State Control
Function P-CSCF Proxy Call State Control
Function I-CSCP Interrogation Call State Control
Function HSS Home Subscriber Server
Source Zuidweg, J. (2005) IMS for Fixed and
Mobile Convergence
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NGN Technological background (2)Clarifying
terms NGN, IMS, NGI

• The NGN is
• A Next Generation Network (NGN) is a packet-based
  network able to provide services including
  Telecommunication Services and able to make use
  of multiple broadband, QoS-enabled transport
  technologies and in which service-related
  functions are independent from underlying
  transport-related technologies. (Adapted from
  ITU-T ITU_1-2004 )
• The IMS is
• IP Multimedia Subsystem (IMS) is a standarized
  access independent IP based architecture that
  interworks with existing voice and data networks
  for both fixed and mobile users. (Adapted from
  3GPP 3GPP_1-2006)
• The NGI is
• It is an initiative to empower the current
  Internet using IPv6 protocol to obtain high speed
  networks fulfilling QoS and reliable
  communication services (Adapted from the
  Internet2 Network I2-2007)

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NGN Technological background (3) Evolution
NGN, IMS and NGI

• Evolution towards a unified service delivery
  plattform

Source WIK-Consult
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NGN Technological background (4) Access NGN
The local loop today

• The traditional local loop Stylized facts

Source WIK-Consult
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NGN Technological background (5) FTTx
architectures (1)

• FTTN Fiber-To-The-Node usually MDF
• FTTC
• Fiber-To-The-Cabinet usually Street Cabinet
  (SC)
• Fiber-To-The-Curb
• FTTP Fiber-To-The-Premise
• FTTB Fiber-To-The-Building
• also Fiber-To-The-Basement
• also FTTM Fiber-To-The-MDU (MDU
  Multi-Dwelling-Unit)
• FTTH Fiber-To-The-Home

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NGN Technological background (6) FTTx
architectures (2)
Source G. Gauthey, presentation at WIK VDSL
Conference March 22,.2007
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NGN Technological background (7) Distance and
Bitrate
Datenrate (kbit/s)
Länge TAL (m)
Cable 0,5mm Loop, 12 self Xtalk Disturbers 2x
SDSL 1024 Kb/s, 4x SDSL 2304 Kb/s, 1x 2-pair HDSL
2B1Q, 10x ADSL2, Annex B, 41x ISDN 4B3T
Source A.H. Wulf presentation at WIK VDSL
Conference March 22,.2007
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NGN Technological background (8) Distribution
of local loop lengths
Lenght local loop
Source A.H. Wulf presentation at WIK VDSL
Conference March 22,.2007
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NGN Technological background (9)Wrap-up

• Term NGN used as meta-category covers all
  other related terms
• Characteristics NGN
• Logical separation of the transport, control and
  service layer
• Differentiated network access
• Unique IP transport network in the core
• Application of open protocols (ITU,ETSI, IETF) to
  integrate different services, transport and
  system providers
• Thus, a-priori far-reaching potentials for
  competitors compared to PSTN/ISDN world
• Migration of networks Core NGN, access NGN
  (local loop, backhaul)
• In many countries network migration is already
  underway

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Overview

• NGN Technological background
• Migration of networks Examples
• Regulatory challenges

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Migration of networks Examples (1) BT (1)

• PSTN network infrastructure
• About 80,000 SCs
• About 6,000 MDFS
• Relatively outdated network infrastructure
  (primarily analogue)
• Future 21st Century Network (21CN)
• ALL-IP network, complete migration to VoIP
• Focus primarily on core network no(t yet) FTTx
• No phasing out of MDF locations (up until now)
  envisaged
• Overall investment outlays till 2010 about 10
  bill.
• Expected decrease OPEX 1 bill. p. a. till 2008

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Migration of networks Examples (2) BT (2)

• Comparison of the current voice network and 21CN

Source Ofcom (2005), Next Generation
NetworksFuture arrangements for access and
interconnection Figure 1, page 11
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Migration of networks Examples (3) BT (3)

• BT plans to implement 100-120 Points of
  Interconnection (POI) in their 21CN compared to
  about 3,000 in the existing network
• Open Reach organisational divestiture of the
  wholesale business from the rest of the company
  (structural separation light in cooperation
  with OFCOM)

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Migration of networks Examples (4) KPN (1)

• PSTN network infrastructure
• About 28,000 SCs
• About 1,350 MDFs
• Future
• FTTC (SC), VDSL relatively short sub-loops
• Objective ALL-IP closing down of PSTN by
  2010 entirely new access and core network
• Substantial diminution of MDF locations
• Essential contribution to overall investment
  financing of about 1 bill. Euro through sale of
  MDF real estate

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Migration of networks Examples (5) KPN (2)

• The envisaged ALL-IP network of KPN (stylized
  facts)

Source OPTA (2006) KPNs Next Generation
Network All-IP, Positionpaper,
OPTA/BO/2006/202771 October 2
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Migration of networks Examples (6) France
Telecom (1)

• Current PSTN network infrastructure
• About 13,500 MDFs
• About 120,000 SCs
• Average length of the sub-loop about 750 m
• Theoretical coverage ADSL2
• 30 of the population could get 15 Mbit/s
• 55 of the population could get 10 Mbit/s
• 76 of the population could get 5 Mbit/s
• In the summer of 2006 France Télécom launched a
  FTTH pilot in 6 arrondissements of Paris and
  cities in the Hauts-de-Seine. This network
  upgrading affects several thousand households.
• Since March 2007 FT offers a total of 2.5 Gbps
  (each 1.2 Gbps download und upload) (per tree)
  in Paris.
• Summer 2007 Launch of FTTH activities also in
  Marseille

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Migration of networks Examples (7) France
Telecom (2)

• Inhouse cabling by FT

FT deploys fiber up to the apartment in which a
Boîtier optique (electrical-optical interface)
changes the optical signal into anelectrical
signal. Each customer receives such a device in
his/her apartment.
Source pcimpact 2006
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Migration of networks Examples (8) Wrap-up

• British Telecom
• NGN core only, little emphasis on NGN access
• Operational savings, faster time-to-market
• Structural separation light undertakings with
  OFCOM
• KPN Comprehensive revamping of both access and
  core networks
• VDSL for the access network, relatively short
  loops
• Funded by sale of real estate no longer needed
• Challenges to sub-loop unbundling high density
  needed
• FT
• FTTB/FTTH in dense metropolitan areas
• Many unresolved challenges as regards unbundling

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Overview

• NGN Technological background
• Migration of networks Examples
• Regulatory challenges

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Regulatory challenges (1) The NGN layered model

• NGN carries further the separation of the service
  from the network.

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Regulatory challenges (2) Potential layers for
regulatory intervention

• Physical layer
• IP-based network layer
• Interconnection
• Assured Quality of Service (QoS)
• Application layer

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Regulatory challenges (3) The Physical Layer

• NGN can support many kinds of physical and
  logical transmission media
• Fixed versus mobile
• Cable television
• ADSL
• VDSL
• FTTB/FTTH
• Some operators will not offer their own access at
  all (the provider operates a NGN core, but does
  not offer its own access)
• Many operators will offer a hybrid of two or more
  of the above
• Special regulatory challenges emerging with
• VDSL
• FTTH/FTTB

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Regulatory challenges (4) Physical layer Access
issues VDSL/SC (1)

• DSLAMs at the MDF likely to support only a (very)
  limited fraction of the user base
• VDSL at the SC reasonable in case of relatively
  short sub-loops
• Sub-loop unbundling (SLU) requires the
  enlargement of the backhaul network (between
  MDF and core) up to the SC

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Regulatory challenges (5) Physical layer
Access issues VDSL/SC (2)

• Co-location options regarding SLU at the SC
• Installation of a second (or third) SC next to
  the SC of the incumbent ( virtual co-location),
  i.e. competitor establishes own DSLAM in the
  vicinity of the incumbent SC
• Non trivial (perhaps not possible)
• Physical co-location
• Competitor installs own DSLAM at incumbent SC
• Competitor installs own line card at incumbent SC
• Challenges Space, management of access, heat
  dissipation
• Bitstream access Where should traffic exchange
  take place?
• At current PoPs
• At current MDF locations

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Regulatory challenges (5a)Scenario 1 Sub-Loop
Unbundling/Bitstream in the cable distribution
cabinet (1/2)
Cable Distribution Cabinet
Central Office
Home
SLU with additional Outdoor Cabinet
DSLAM
MDF
PSTN
Aggregation
BRAS
CPE
Backbone Operator A
DSLAM
MDF
Backbone Operator B
SLU over DSLAM/Bitstream to 2nd Operators Network

• SLU with additional Outdoor Cabinet
• Redundancy of Cabinets
• SLU over DSLAM (Line Card Leasing Model)
• Requires multi-tenant functionality in theDSLAM

CPE Customer Premise EquipmentBRAS Broadband
Remote Access ServerMDF Main Distribution
FrameSLU Sub-Loop Unbundling
Source A.H. Wulf presentation at WIK VDSL
Conference March 22,.2007
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Regulatory challenges (5b)Scenario 1 Sub-Loop
Unbundling/Bitstream in cable distribution
cabinet (2/2)
Cable Distribution Cabinet
Central Office
Home
DSLAM
Aggregation
PSTN
BRAS
CPE
Backbone Operator A
DSLAM
MDF
SLU using collocated space in Cable Distribution
Cabinet

• SLU using collocated space in Cable Distribution
  Cabinet
• Limited by size of cabinets
• Potential heat dissipation problems

Source A.H. Wulf presentation at WIK VDSL
Conference March 22,.2007
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Regulatory challenges (5c)Scenario 2 Unbundled
Local Loop (ULL)/Bitstream in central office
Home
Cable Distribution Cabinet
Central Office

• Bitstream via Aggregation
• Possible at any point in the network
• Limited control for 2nd operator
• ULL
• Limited reach

Source A.H. Wulf presentation at WIK VDSL
Conference March 22,.2007
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Regulatory challenges (6) Physical layer
Phasing out of MDFs

• MDF access today very important for broadband
  competition
• Investment outlays of competitors regarding MDF
  access deployment are on their balance sheet for
  8 years or more (depreciation)
• Key issues from a regulatory perspective
• How to handle the risk of stranded investments?
  
• How to preserve and stimulate effective and
  enduring (infrastructure) competition if MDFs are
  phased out?
• How many (parallel) infrastructures are necessary
  for effective competition in a NGN world?

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Regulatory challenges (7) Physical layer
Access issues FTTB/FTTH

• FTTH/FTTB will tend to be preferred
• Where loop lengths are longer
• Steady state for the broad broadband world
• Substantial civil engineering costs
• Key issues from a regulatory perspective
• Access to intra-building wiring for multiple
  dwelling units (new last mile)
• House owners will presumably not accept a second
  set of fiber infrastructure
• Implies huge first mover advantage
• Unbundled access, in particular regarding PON
  architecture
• Ducts are again important
• France is currently coordinating discussions with
  industry

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Regulatory challenges (8) IP Network Layer
Interconnection (1)

• Traditional telephony Billing approaches
• Wholesale level
• Calling Partys Network Pays (CPNP)
• Private negotiated arrangements (à la Coase),
  often Bill and Keep
• Retail level
• Often Calling Party Pays (CPP)
• Often flat rate ((banded) flat rate, minute
  contingents)
• Internet
• Wholesale level
• Private negotiated arrangements (à la Coase) with
  peers, often with no charges
• Usually banded flat rate to transit customers
• Retail level diverse, often flat rate

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Regulatory challenges (9) IP Network Layer
Interconnection (2)

• CPNP wholesale arrangements will be difficult to
  sustain in their current form in an NGN world.
• Competitive pressure from service providers who
  do not operate networks
• Difficulty or impossibility to use a surcharge on
  the service to pay for costs of the network when
  these are not necessarily provided by the same
  integrated firm
• Current metrics (minutes of use) correlate only
  weakly with real usage-based marginal costs
• The attribution of cost causation to the party
  placing the call was always questionable, and
  much more so in an NGN world
• Substantial challenges with measurement and
  accounting, especially where the service provider
  and the network operator are distinct entities

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Regulatory challenges (10) IP Network Layer
Interconnection (3)

• The inherent IP-based nature of the NGN
  potentially opens the network to third party
  applications, including VoIP
• Will best-efforts IP be fully open to
  competitors, or will incumbents with SMP prefer
  their own services?
• Will IP with assured Quality of Service (QoS) be
  fully open to competitors, or will incumbents
  with SMP prefer their own services?
• Best-efforts IP-based services could, in most
  cases, enable effective competition to the
  incumbents own QoS-enhanced applications
• Network operators may prefer a closed environment
  (walled garden)

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Regulatory challenges (11) IP Network Layer
Interconnection (4)

• Will the incumbent attempt to impact performance
  of best-efforts IP (QoS degradation)?
• Intentional degradation
• Failure to upgrade infrastructure as needed
  (equivalent)
• Regulatory remedies to QoS degradation
• Ex ante nondiscrimination obligations
• Obligation to publish QoS under Article 22 USD
• Competition law (foreclosure)

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Regulatory challenges (12) IP Network Layer
Transition period concerns

• How long should operators be required to provide
  SMP remedies?
• Incumbent should be able to upgrade its network
• Guideline Preserve competition, not individual
  competitors
• If POIs for access and interconnection are
  unilaterally discontinued, what is the impact on
  competition?
• Incumbent should be able to upgrade its network
• Risk of stranded investments with competitors
• Guideline Preserve competition, not individual
  competitors
• Suggestion Reliance on consultative mechanisms
  and on notice

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Regulatory challenges (13) Application Layer

• Will the migration to NGN facilitate or hinder
  competition with providers of application
  services?
• Each layer of the NGN architecture is in
  principle open to competition
• IMS/NGN is well-suited to either enabling or
  inhibiting third party access at the Application
  Layer
• Operators with market power will likely prefer to
  maintain a closed walled garden rather than an
  open competitive environment
• The degree to which this is a concern is unclear
  competition at the IP-based Network Layer might
  mitigate concerns with bottlenecks at the
  Application Layer

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Dieter ElixmannWIK-Consult GmbHPostfach
200053588 Bad HonnefGermanyTel 49 (0)
2224-9225-43Fax [phone]Mobile 49
175 521 2571eMail d.elixmann_at_wik-consult.comwww.
wik-consult.com